Wednesday, January 08, 2014

The Right can't handle the reality of the 21st century economy

by David Atkins

One of the biggest differences between a neoliberal and a progressive is whether they talk about our current economic difficulty as a somewhat-larger-than-normal downturn that will soon correct itself, or a fundamental shift in the realities of 21st century economics.

That word "reality" tends to come up frequently in these discussions, as progressives tend to point to a world that no longer functions well by the norms of 20th century industrial capitalism, while conservatives and centrists try to promote business more or less as usual. Apropos of that reality, here's Krugman:

But that was a long time ago. These days crime is way down, so is teenage pregnancy, and so on; society did not collapse. What collapsed instead is economic opportunity. If progress against poverty has been disappointing over the past half century, the reason is not the decline of the family but the rise of extreme inequality. We’re a much richer nation than we were in 1964, but little if any of that increased wealth has trickled down to workers in the bottom half of the income distribution.

The trouble is that the American right is still living in the 1970s, or actually a Reaganite fantasy of the 1970s; its notion of an anti-poverty agenda is still all about getting those layabouts to go to work and stop living off welfare. The reality that lower-end jobs, even if you can get one, don’t pay enough to lift you out of poverty just hasn’t sunk in. And the idea of helping the poor by actually helping them remains anathema.

Will it ever be possible to move this debate away from welfare queens and all that? I don’t know. But for now, the key to understanding poverty arguments is that the main cause of persistent poverty now is high inequality of market income — but that the right can’t bring itself to acknowledge that reality.

But at a certain point reality intrudes. After decades of failure by supply-side ideologues and their slightly less conservative neoliberal cousins, the veneer wears off. The electorate's desire for aspirational self-regard and in-group pride cedes ground to desperation, anger and resentment over the obvious injustice of it all.

It doesn't occur to Luntz for a second that the economy is genuinely terrible, that inequality is genuinely out of control, that the banks genuinely screwed everyone, that people genuinely haven't had wage increases in 40 years even as cost of living spirals upward. It doesn't occur to him that these are real problems that no language can explain away, and that people are genuinely angry and need help. Most voters may not be able to put the pieces together into a coherent whole, but they know that they're suffering, that the system isn't working anymore, and that fat cat elites (who they are varies depending on your political leanings, but the anger is heartfelt all the same) are profiting from all of it. No one sold them a bunch of cute phrases to convince them of that. It's too damn obvious on its face. Those with no conscience whatsoever are still using racist and sexist code to sell the idea that the advantage-takers are welfare queens and nefarious liberal enablers, but that also only goes so far as the voters inclined to believe that age out of the electorate.

The rhetoric of reality has significant consequences. It's very important to point out that we're not playing by 20th century rules anymore, not just as a matter of politics but as a matter of economic fundamentals.

It's not just that economic incentives have been oriented to the wealthy, that taxes on corporations and the wealthy have been pointlessly slashed, and that trade policies have hurt the middle class. Those things are true, but there's more to it. The world is indeed flatter than it was, globalization of the labor market is here to stay, the Internet and its consequences are rapidly destroying and deskilling entire industries without replacing them, and mechanization is starting to kill pink and white-collar jobs in addition to most of the blue-collar jobs. There just aren't enough jobs left for the people who want to work, the jobs that exist don't pay enough on the "free" labor market, and most of them are tedious, unfulfilling drudgery with little labor leverage, unsuited to the skills and interests of an increasingly overeducated and underpaid workforce.

These aren't just problems in America. Unemployment is sky-high in most of Europe and the East Asian democracies as well in spite of better traditional 20th century social liberal solutions, with hordes of Masters and Ph.D. graduates unable to find even entry-level service jobs in many areas.

Basic reality has changed. That means the solutions must change to meet it.